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tude: Companies that reveal grey market activities & the causes following them discover about their customers & their markets. Since grey markets materialise on their own, outside existing supply channels & structures, they are frequently driven by influential market forces (such as short supply to a particular segment that wants the product) & therefore put forward some of the purest forms of market intelligence accessible.

2.2 CONS OF GREY MARKETING

1. Dilution of exclusivity: Perhaps the most instant outcome of grey market is the draining down of exclusive rights to distribute a product. Instead of being the solitary distributor or one of a select few enterprises for delivering a product, the authorised distributor becomes merely one of several sources. The consequence is a radical drop in margins as multiple outlets struggle for the same customer. What follows promptly thereafter is only to be expected: loud complaints from the legitimate distributors and calls to the company to “do something concerning it!”

2. Free riding: But what if a manufacturer turns blind eye or, worse yet, writes off its authorized distributors' complaints? While it is improbable that a distributor would split relations with the supplier in protest, there are several indirect but possibly more insidious ways of reaching the manufacturer. One of these is free riding. Free-riding was initially offered by Tan et al. (1995, 1997) as an alternative justification for the event of grey markets. In such situations, authorised traders, dispirited by anemic margins and manufacturer's ineffectiveness, begin skimping on the imperative services they generally offer—such as presale service, consumer awareness & education on product features, salesperson training and so on—in an attempt to lessen their expenses and match grey marketer's price. This approach can weaken the value-added services and activities that often lay at the heart of several enterprises sources of differentiation and competitive plan in the marketplace. As one automobile dealer put it, “We invest millions in sales and service facilities. It's hard to compete with someone whose only investments are a briefcase and a cell phone.” The under provision of services is the death knell of high-end brands, as customers who value service will discard the brand in droves.

3. Damage to channel relations: Perhaps the prime cost of grey marketing is its impact on the relations and trust amid members of the distribution system. When a manufacturer has made major investments in official channel members or is dependent on one or a few associates (or both), grey markets that rip off these relationships can be particularly pricey.

Visualise an official supplier that has recently coughed up $2 million to set up a new outlet and its related trappings—all to accomplish its contractual obligations. The manufacturer has guaranteed the dealer that ownership of an exclusive region will more than add up for his venture. Just as the distributor begins to foresee the promised sales, he receives word that the cash cow of the product line is offered down the street at a markdown of 15% to 20% off its own posted price. Frenzied phone calls to the manufacturer are met with empty reassurances or even stony silence. What should the enter本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。